Marvel--publisher of titles like "Spider-Man," "The X Men," "The Fantastic Four" and many others--filed the suit in November 2004. It alleged that "City of Heroes," an online game with hundreds of thousands of users, infringed on Marvel's copyright by giving players a content creation engine that allows them to design avatars that can look like the Incredible Hulk, Captain America or any other copyright-protected Marvel character.
Terms of the settlement, which was announced on Wednesday, were not disclosed.
In the aftermath of the suit, many law professors, game designers and others interested in promoting open-ended content creation expressed concern that a Marvel victory would put a halt to such creation--not just in games but in other arenas where users can create content that could be considered infringing.
They also asserted that Marvel's claims were specious, given that the company was effectively suing NCSoft for giving people the ability to enact the digital equivalent of making a Spider-Man costume and wearing it in their backyard.
Since filing its suit, Marvel has begun working with online game publisher Sigil to produce an online game based on it characters.
In any case, the terms of the settlement appear to do nothing to immediately halt "City of Heroes" players from creating any kind of characters they want.
"The parties' settlement allows them all to continue to develop and sell exciting and innovative products," NCSoft wrote in a press release about the settlement, "but does not reduce the players' ability to express their creativity in making and playing original and exciting characters."
The problem, according to several legal experts, is that the language of the announcement doesn't make clear the terms of the settlement. Thus, it is not known whether Marvel has retained its right to seek legal relief against publishers like NCSoft or players who create potentially infringing characters in games like "City of Heroes."
Suits may not be over
That's because the announcement included the following language: "Therefore, no changes to 'City of Heroes' or 'City of Villains' character creation engine are part of the settlement."
The suit, which was filed in U.S. district court in Los Angeles, has seen a series of rulings that have largely gone NCSoft's way. Neither NCSoft nor Marvel would comment on the settlement beyond Wednesday's announcement.
Fred von Lohmann, a staff attorney at the Electronic Frontier Foundation, which has been tracking the lawsuit, said that because Marvel and NCSoft settled, it is likely no one will ever know the terms and what rights online game publishers and players have going forward.
"This is one of the big problems with copyright and trademark law," von Lohmann said. "There is no easy way to get an answer to any of these questions if the rights holder is unwilling to fight it out in court."
But because the announcement contained language saying that the "City of Heroes" content creation engine wasn't involved in the settlement, von Lohmann fears companies like Marvel aren't done suing online game publishers.
"This probably won't stop Marvel and other rights holders from threatening the (online game) community," he said. "Their lawyers can send letters and they can put pressure on companies to stop what they're doing, and if they don't comply, they run the risk of legal action."
In a Wednesday e-mail to many of the experts in the online game community, Greg Lastowka, an assistant professor at Rutgers School of Law, noted that "the terms of the settlement apparently allow the NCSoft character creation engine to stand, which is a victory for the players."
But he also echoed von Lohmann's concerns.
"However, Marvel's claims of player infringement have not been formally rejected by the court, which means analogous claims might be pursued by Marvel, or a like-minded company, in the future."
Still, to some legal experts, the most noteworthy result of the settlement is a victory for player creativity.
"The public has long benefited from a certain degree of ambiguity in copyright," said Beth Noveck, an associate professor at New York Law School. "One the one hand, this creates uncertainty among creators. On the other hand, it is this ambiguity that opens up opportunities to try new things and test the boundaries."